According to FINRA, Home Financial Services, Inc was fined $50,000 for failing to disclose execution time and failing to properly disclose mark-ups and mark-downs on customer confirmations for municipal securities transactions.

The firm reported mark-ups and mark-downs only as a percentage of prevailing market price on customer confirmations, rather than providing the required dollar amount disclosure. Additionally, the firm did not disclose mark-downs in any manner on customer confirmations and failed to disclose execution time on retail customer confirmations, both of which are required under MSRB rules.

The firm also incorrectly applied the non-transaction-based compensation indicator on reports to the MSRB's Real-time Transaction Reporting System for transactions that actually included mark-ups, mark-downs, or commissions. This occurred due to a coding error in the firm's vendor software that automatically applied the incorrect indicator to certain transactions.

Furthermore, the firm failed to supervise reasonably for compliance with MSRB disclosure requirements. The firm's written procedures did not require disclosure of mark-ups or mark-downs, and supervisory reviews of customer confirmations did not verify that mark-downs and execution times were properly disclosed. The firm also lacked procedures for reviewing the correct application of special condition indicators.

This case illustrates why proper disclosure of mark-ups, mark-downs, and transaction details is essential for investor protection. These disclosures help investors understand the true cost of their municipal bond transactions and compare pricing across different firms. When firms fail to properly disclose these charges, investors cannot make fully informed decisions about whether they received fair pricing.